South Korea’s Financial Services Commission is considering whether to allow market making in the digital asset market as part of the country’s second major crypto law. Market makers provide r
South Korea’s Financial Services Commission is considering whether to allow market making in the digital asset market as part of the country’s second major crypto law. Market makers provide regular buy and sell orders, helping traders find buyers and sellers more easily.
The practice is currently banned under the Virtual Asset User Protection Act, which does not make an exception for market making and treats it as unfair trading alongside activities such as price manipulation.
Source: Digital-asset
Yoo Young-joon said South Korea will study rules for market makers as part of its second crypto law, while also considering stricter oversight of exchanges, token listings and unusual trading. The proposed law could introduce stronger requirements for major shareholders and executives, expand regulation to custody, brokerage, asset management and investment advice, and allow Korean companies to issue digital assets under disclosure rules. It could also include plans for a won-backed stablecoin and stronger user protections.
If adopted, the changes would give businesses more ways to use digital assets beyond trading. Companies could use stablecoins for cheaper and faster payments, hold digital assets on their balance sheets and access services such as prime brokerage. Financial firms could also use digital assets to develop new products that combine traditional banking services with crypto.
The proposal has drawn attention because market makers can play an important role in keeping trading active, but their presence also raises concerns about how much influence they could have over prices.
That is why Urspidy sees the possible change as a step toward greater crypto adoption in South Korea. The comment suggests that clearer rules could encourage more professional firms to provide liquidity, making it easier for people to buy and sell digital assets without large gaps between buying and selling prices.
Another user focused on the issue of stability. The comment pointed to a stablecoin trading at around four times its intended value, using it as an example of how badly prices can move when market conditions break down. Since stablecoins are designed to remain close to a fixed value, such a large move can expose traders to significant losses and raise questions about the strength of the market around them.
Pytho then pointed to the challenge regulators would face if market making is allowed. The rules would need to improve liquidity and make trading more efficient without giving market makers too much influence over prices. That means any new system would likely need clear safeguards against practices that could distort prices or manipulate the market.
Also Read: South Korean Exchanges Upbit and Bithumb Expand KRW Markets with Canton and Arcium Listings
The Gotbit case pushes the history behind market makers’ ban. Before its founder was charged, Gotbit was a top market maker in crypto, with more than 200 employees and tens of millions of dollars in yearly revenue, prosecutors said. From 2018 to 2024, they said, it ran wash trading for paying clients, which means buying and selling with itself to fake trading volume. Fake volume helped small tokens like Saitama and Robo Inu get listed on bigger exchanges and attract real buyers.
US authorities caught it through Operation Token Mirrors, in which the FBI created its own token for the first time to catch fraudsters. The operation led to charges against 15 people and three firms. Gotbit’s founder, Aleksei Andriunin, pleaded guilty in March 2025 and was sentenced to eight months in prison, counted as time already served after his arrest in Portugal.
Prosecutors had asked for 15. The company forfeited 23 million dollars in crypto. The same job title covers both honest firms and paid manipulators, which is why regulators keep asking who a market maker works for and whether its trades are real.
South Korea would not be the first country to regulate crypto market makers, but its proposed approach would be different because market making is currently treated as unfair trading under its rules. In other major markets, regulators have instead been working to bring these firms into existing licensing and reporting systems.
In the US, London-based market maker Wintermute registered as a broker-dealer with the SEC and FINRA on August 6. Its US arm can now trade stocks and stock options and act as an authorized participant for exchange-traded products, including digital asset ETFs. CEO Evgeny Gaevoy said firms that can operate across both crypto and traditional finance will have an advantage. Other crypto market makers have expanded through acquisitions, including Ripple’s $1.25 billion purchase of Hidden Road and GSR’s acquisition of Equilibrium Capital Services.
Europe has taken a broader licensing approach. The final transition period under the Markets in Crypto-Assets Regulation ended on July 1, requiring crypto service providers operating under the regime to obtain licenses. Regulators have issued more than 200 licenses, with Germany among the countries issuing the most. Market makers including Flow Traders and Kairon Labs have also addressed how the rules apply to their businesses.
Hong Kong securities regulator CEO Julia Leung said licensed platforms could share order books with overseas affiliates, allowing them to access deeper pools of buyers and sellers. Japan has also moved crypto closer to its securities rules, with legislation passed in July introducing measures covering insider trading, token issuer disclosures and penalties for unregistered operators.
The details differ across these markets, but the approach is that market makers are being brought inside the regulatory system rather than treated as prohibited participants. That gives regulators a way to set requirements around licensing, reporting, market conduct and investor protection while still allowing firms to provide liquidity.
Meanwhile, The Bank of Korea (BOK) has launched a pilot programme for its first 24-hour international settlement network for the Korean won, allowing foreign investors to trade and settle transactions outside South Korea’s conventional banking hours.
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